Journal Entries for Merchandise Transactions

1. March 1, 2011
Purchased 200 units of merchandise at $10 per unit in cash.

debit credit
Merchandise 2,000
Cash 2,000


2. March 5, 2011
Purchased 500 units of merchandise at $10 per unit on credit.

debit credit
Merchandise 5,000
Accounts payable 5,000


3. March 10, 2011
Sold 300 units of merchandise at $15 per unit on credit.

Journal entry to record sales revenue.

debit credit
Accounts receivable 4,500
Sales 4,500


Journal entry to record cost of goods sold.

debit credit
Cost of goods sold 3,000
Merchandise 3,000


4. Merchandise in inventory

700 units purchased - 300 units sold = 400 units in inventory
400 units x $10 per unit = $4,000

5. Gross profit
= Sales - Cost of goods sold
= $4,500 - $3,000 = $1,500